Considering the rapid evolution of digitization and the ways technological advancements have proved to be revolutionary for a wide range of industries, blockchain is one of the most innovative and useful technologies that play a crucial role in accelerating cryptocurrency acquisition.
Today, fintech industries are amplifying blockchain utilization in numerous financial services. Financial infrastructures, traditional banks, and credit unions must utilize fintech innovations within existing service platforms, extensions in order to survive in the next five to ten years.
According to Deloitte’s 2020 Global Blockchain survey, up to 55% of executive leaders claimed that blockchain is included in the top 5 strategic priorities. By the year 2023, the C-suite team will implement blockchain innovations and solutions for mainstream acquisition by over 70%.
Numerous fintech startups, businesses, big tech, vendors, venture capitalists are targeting blockchain in the below described disruptive areas. Additionally, blockchain will create disruption in numerous government central bank systems- new digital currencies and also regulations.
1. Rapid Adoption of Smart Contracts
Smart contracts are revamping the way business is conducted through blockchain transactions. This helps in the elimination of escrow service requirements and people-intensive paperwork. Currently, smart contracts in blockchain are utilized in enormous financial infrastructures, including JPMorgan. The company enables transactions in the 2.3 billion repurchase agreement market by utilizing smart contracts on an Ethereum-based blockchain that allows cash and US treasuries transfers to be paid out instantaneously.
Smart contracts provide a wide range of opportunities to financial infrastructures to incorporate blockchain technology. These are robust mechanisms in execution and can be expanded across national borders. Fintech leaders of large institutions are thriving to add new capabilities and solutions to existing solutions. Fintech’s popularity continues to drive consolidation in financial services. SME’s must integrate fintech services, open API’s and partner platforms
2. Identity Fraud Management and Personal Data Security
The emergence of personal data and digital identity management is crucial for fintech industries. Identity verification solutions continue to be the most significant in financial infrastructures considering evolution in cybercriminals in parallel to technological advancements. It is observed that every year credit unions and financial infrastructures lose billions of dollars due to cyberattacks. Blockchain transaction data circulates into decentralized ledgers, and data is encrypted, recorded, and secured in an application after the execution.
If applied correctly, blockchain transactions can prove to be beneficial for security enhancement and they can prove to be effective in battling fraudulent activities. Let us consider a use case for personal privacy. Ernst & Young’s Nightfall using GitHub results in making public blockchain and transactions are private and secure by replacing sensitive business information and data with a type of cryptography known as Zero-Knowledge Proof.
3. Payments and Settlements Within Few Seconds
The rapid acquisition of mobile payments and digital wallets will continue to rise as a new wave of innovations wash over fintech. Blockchain payment innovations involve multiple components, such as smart contacts, mobile wallets, contactless payments, mobile payments, and identity verification. Further use-cases may also require artificial intelligence and machine learning.
Fintech transactions based on blockchain will continue to evolve to bring them from hype to mainstream in less than three years. Mobile wallets will continue to replace physical wallets by utilizing credit or reward cards. According to Statista, digital payment transactions surpassed the figure of USD 6.68 billion in 2020, growing at the rate of 22.1% by every passing year.
4. Increased Automated Growth
This year will face increased interests in both customer and business-to-business financing and credits. The B2B, C2C, and B2C areas will face fintech acquisition at a swift pace in form of blockchain-based applications. Credit unions and financial infrastructures are already in the mainstream and enable near-real-time credit approval with fintech applications such as Plaid. Currently, large-scale manufactured payment providers and networks entering the card instalment space are verifying the trends towards financing and credits.
5. New Normal: Credit Cards, Digital Currencies, and ATMs
Usage and utilization of digital currencies are accelerating globally and this evolution is the result of two major factors: the pandemic of COVID-19 and increasing customer demand. Digital transactions are accurate, effective, efficient, reliable, simple, and can be enabled anytime and anywhere.
Numerous global economies are also prone to digitization and are becoming cashless, such as M-Pesa, WeChat, and Venmo. These applications facilitate the process of financial transactions and payments. Blockchain proves to be beneficial in delivering private and decentralized digital currencies. According to Motley Fool, the three big coins Bitcoin, Ethereum and Ripple had a market value of approximately USD 340 billion in November 2020.
There will be no wrong in saying that fintech companies are reshaping the dimensions and landscape of financial transactions with the help of blockchain. Traditional methods of financial transactions are transformed into more secure, reliable, and effective procedures that tend to develop a transparent relationship between customers and businesses by strengthening credibility and trust. In the upcoming years, customers will continue to acquire revolutionary mobile-based technologies if effective regulations and security stands keep on evolving at a swift speed.
The next evolution will be observed in Bank-as-a-service in the upcoming years. Hence fintech blockchain adoption is driving new innovative CEO opportunities in IoT and supply chain management together with 5G.
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